Last week held a meeting of the Commission on legal empowerment of the digital economy at the Moscow branch of Association of lawyers of Russia, where participants discussed the problems and prospects of regulation of the crypto industry in the country. In particular, members of the Commission, which includes representatives of state bodies, business and scientific community, interested in the question of the draft laws on digital of financial assets, adopted by the Parliament in may last year. Recall, then government authority in the first reading passed two bills («On digital of financial assets» and «crowdfunding») to regulate crypto-industry and tokentalk, and in March of this year the Civil code of the Russian Federation was established the concept of «digital rights». What are the problems identified the Committee members and what action they propose — versed DeCenter.
First and foremost, the experts reviewed amendments to the Civil code of the Russian Federation, where now appears the concept of «digital rights». According to experts, this step will benefit the holders of digital assets, which now have protection in the courts. So, on amendments even before they are adopted referred to the court of appeal in bankruptcy «Business Tsar’kova,» and recently, the Prosecutor of the Omsk region, appealing to the same amendments, withdrew the claim to the resource bestchange.ru.
However, in the opinion of the Chairman of the Commission and the managing partner of the legal company «DLR» Alexander Zhuravlev, these changes are imperfect and require revisions, which will take into account certain risks. For example, the current laws did not regulate the purchase and sale of crypto-assets by individuals, without intermediaries, that is, through exchange and exchangers.
As for the draft laws «On digital of financial assets» and «crowdfunding», the meeting noted the weaknesses of these bills and offered to make the following changes to them:
1. The regulation is expected only for certain types of digital assets
The experts noted that the bill is primarily aimed at regulating separate kinds of digital assets, namely, security-token, while leaving outside the framework of the regulation of cryptocurrencies. Yes, inside the information system allowed the use of their own «operating digital signs», but only if it allows the Bank of Russia. «The legislator seems to have decided to move away from regulation of cryptocurrencies, and finally identifying them as speculative instruments. It is not so», — assured the member of the Commission, the practice Advisor IP&IT law firm «Tomashevskaya & Partners», candidate of legal Sciences Roman Yankovsky. Moreover, the bills do not answer the question of what to do with foreign crypto-assets. Proposed in this part of the regulation, in the opinion of the members of the Commission, does not meet the realities of the stock market and prevents the full application of new technologies.
2. Terminology bills are not consistent
So, according to the draft law On «crowdfunding» investments in digital rights are investments in digital financial assets and investment in digital rights utilitarian. The concept of «digital financial asset» refers to the relevant bill, but there is no clear definition of the types of digital of financial assets. As a result there is a risk that utility-tokens can be classified as digital of financial assets and, accordingly, the Issuer of these tokens will be recognized as a violator of the law.
3. The possibilities of individuals are limited
As noted during the meeting of the Commission, Deputy General Director for legal issues and technologies of the company «synergy Research Group» Peter Lyalin, the draft law «On crowdfunding» unreasonably restricts the ability of individuals to use crowdfunding platforms: the creation of creative works, organize cleaning and beautification, programming and so on. Now the activities involve mainly physical persons, and after the bill is passed, their work could be considered illegal. Lyalin said that the bill is necessary to make a clarification on the number of persons who have the right to attract investments on crowdfunding platforms, as well as investment projects. In addition, regulators also need to define its position in relation to non-profit initiatives.
4. The maximum threshold for investment in digital assets is too low
The experts also proposed to increase the maximum amount of investment in digital assets: it is for the citizens it is 600,000 rubles a year. Members of the Commission propose to increase it by half, thus setting the limit for the «investment turnover». «This provides an opportunity for citizens to continue making investments after return of capital», — stressed the member of the Commission, senior lawyer of «Clifford chance CIS limited» Catherine laruns.
5. The bills propose to introduce a centralized mediator
Speaking about the types and definitions blockchain technology used in the bills, a Committee member, Vice-President and head of the legal Committee of RAKIB Elena Gultyaeva noted that the introduction of a centralized mediator (in this case, the operator of the information system) will create a threat to the security of the blockchain of the network and its performance. The integrity of the information on the blockchain in the first place comes from technological and programmatic methods, and the centralized operator can not only affect network performance, but also inhibit its functioning.
6. The lack of regulation of decentralized systems
The current bills do not regulate decentralized distributed public registries and established on the basis of their digital products. Now they provide can only create private distributed information systems. According to experts of the Commission, the absence of these signs bills of decentralized systems in conjunction with the norm of digital rights will create the conditions for the recognition of illegal deals with digital products, which are based on decentralized public registries.
7. It is necessary to expand the circle of participants of the consultative work
Many of the rules consideration of bills — in the blank (reference) and in the future will require additional acceptance by the Bank of Russia of special acts. In the Commission’s view, the regulator should be involved in Advisory work to the scientific community, practitioners, domestic and foreign entrepreneurs, and public organizations for the joint formation and the discussion of future regulations.
8. The absence of public reports, and Advisory practices for the participants of the stock market
The Commission’s experts also offer the Bank of Russia to consider the possibility of holding consultations on the application of existing laws in relation to specific cases (similar to Switzerland, Singapore, UK and other countries). Would be useful to publish reports on practice (similar to the FINMA in Switzerland). Maria Agranovskaya — lawyer, managing partner of GRAD, believes that this will make the activities of market participants more comfortable and will allow them to have an accurate idea about the rules of the game.
9. The possibility of work with foreign investors
The bills also provided the opportunity to work with foreign investors through overseas Bank accounts. This limits the ability of investment attraction and use of foreign lawyers familiar tools.
10. The lack of cross-rate
Speaking about the problems of the draft law «On digital of financial assets» for tax purposes, a member of the Commission and the partner of «Taxology» Mikhail Uspensky noted that a key problem remains the issue of the cross-rate, as the economic operations should be reflected in the tax and accounting records in local currency. On a global scale the crypto industry, according to the assumption, visibly startled and comes alive in the light of the so-called ICO 2.0 — IEO (Initial Exchange Offering).
11. The lack of security when investing in digital assets
Undoubtedly, the new assets and their turnover are not only new opportunities but also new risks, primarily associated with cybercrime. According to Commission member and managing Director of the legal Department of JSC «Group the Renaissance Insurance» Pavel lavrenkova, one of the ways to reduce cyber-risk and improve the attractiveness of all types of investments in the turnover of digital assets is insurance. He noted that in this question Russia should focus on the experience of foreign colleagues. For example, in U.S. Fiat assets involved in the turnover of kryptomere insured in the framework of the FDIC (Federal Deposit Insurance Corporation) is the analog of the Deposit insurance system in Russia.
12. The lack of clear definitions of prohibited types of advertising digital of financial assets
Experts also insist on the definition of specific methods and types of advertising digital of financial assets that fall under the ban. Now the bill «About crowdfunding» any advertising activity which is relevant to digital financial assets. However, if you do not make this issue clear, that under the ban can get including information about educational activities, charitable projects, legal and other services.
The role of the Commission in the regulation of Russian crypto-industry
The Hope is Harsh, Director of the Institute of governance and socio-economic design of REU named after G. V. Plekhanov: «the Commission was, in my opinion, the most meaningful platform for discussion of the legal aspects of blockchain and cryptocurrency. Among the participants are doctors and candidates of Sciences, representatives of the largest technological corporations directly involved in the legislative process, legal consultants with real practical experience of legal support blockchain projects. It allows you to create truly constructive agenda and give really thoughtful recommendations for improving the situation.»
The proposed measures are not exhaustive, but they are able to significantly reduce the risks and barriers associated with the use of new digital assets in the territory of the Russian Federation, sure of a Fee. Following the meeting it was compiled expert opinion with recommendations, and submitted for consideration to the State Duma and Bank of Russia.